Table of Contents
What Is a GST Invoice?
A GST invoice is a detailed document provided by a seller or service provider to a customer, listing the goods or services sold. It includes itemized pricing before taxes, as well as the applicable GST components such as CGST and SGST. This invoice serves as proof of the transaction and is essential for both the seller and buyer to ensure accurate tax filings and compliance with GST regulations. It allows buyers to verify product or service costs and track the total amount due after tax is applied.
Components of a GST Invoice Bill
- Unique invoice number and date of issue of invoice
- Supplier name, address, and GSTIN
- Customer name
- Shipping and billing address details
- Taxpayers’ and customers’ GSTIN number
- Place of supply and delivery locations
- HSN code for goods and SAC code for services
- Description of the items dispatched (details of goods or services)
- Quantity and unit of measurement
- Total value of supply and taxable value
- GST rates plus tax amount segregated into CGST/SGST/IGST/UTGST/cess
- Reverse charge if applicable
- Discounts, if any
- Handwritten or digital signature of the supplier or authorised representative
If the recipient is not registered under GST and the invoice value exceeds ₹50,000, then the invoicing under GST should include the following additional details:
- Name and address of the recipient
- Delivery address
- Name of the State and State code
GST Bill Example Format
The format of a GST invoice differs based on the business’s needs and industry standards. The following image provides a general example of the GST invoice format.
Prescribed GST Bill Formats
Tax authorities provide standardized templates for the GST bill. It outlines mandatory fields like supplier and recipient details, invoice number, date, tax breakdown, and total payable amount. The template below represents a typical GST bill format, which can be customised to suit your branding and layout preferences.
Who Should Issue a GST Invoice?
GST-registered businesses must issue such invoices for the sale of goods and services. These invoices must include a detailed list of the products or services provided and the payment amount due. To claim input tax credit (ITC), businesses should ensure they receive GST-compliant invoices from their vendors.
When Should a GST Invoice Be Issued?
GST laws mandate specific timelines for issuing invoices, revised bills, debit notes, and credit notes based on the type of supply. For goods, a GST tax invoice must be issued when the value exceeds ₹200. However, GST-registered suppliers must issue invoices upon customer request, regardless of value. Timelines vary based on the nature of goods and services supplied:
- Goods (Normal Case): An invoice must be issued before or at the time the goods are removed.
- Goods (Continuous Supply): An invoice must be issued before or at the time of each successive event, either upon issuing statements of accounts or receiving payment.
- Services (General Case): An invoice must be issued within 30 days from the date the service is provided.
- Services (Banks & NBFCs): An invoice must be issued within 45 days from the date the service is provided.
What Are The Types of GST Invoices?
1. Bill of Supply
A Bill of supply is similar to a GST tax invoice but does not include tax charges. It is issued when GST does not apply to a transaction. For example, it is used for exempt goods or services or when a supplier is registered under the composition scheme.
2. Invoice-cum-Bill of Supply
An Invoice-cum-Bill of supply is a combined document used when both taxable and exempt goods or services are supplied to unregistered buyers.
3. Aggregate Invoice
An aggregate invoice is issued for multiple transactions where the total value is less than ₹200 and the buyer is unregistered. It simplifies billing by consolidating these smaller transactions into a single invoice.
4. Reverse Charge Invoice
Under the reverse charge mechanism (RCM), the recipient, instead of the supplier, issues the invoice and directly pays the GST to the government. A payment voucher should also issued along with this invoice.
5. Debit and Credit Notes
Debit notes are issued in scenarios where the original invoice amount needs to be increased. This could occur when the tax charged in the original invoice was less than required. Debit notes are used to adjust post-supply price increases due to market changes or supplier-recipient agreements.
Credit notes are used in situations where the amount on the original invoice needs to be reduced. This occurs when the tax charged in the original invoice is more than required. Credit notes are issued to process returns of goods or services and provide post-supply discounts.
Can You Revise Invoices Issued Before GST?
It is possible to revise invoices issued before obtaining registration under GST. After receiving GST registration, taxpayers have one month to issue revised tax invoices for transactions between the registration’s effective date and certificate receipt.
These revised invoices replace the original ones and must be used to report the sales in GST returns, pay the applicable GST, and allow B2B customers to claim ITC. The revised invoice must be clearly labelled as a “Revised Tax Invoice” to ensure compliance.
GST Invoicing Under Special Cases?
While the general format for a tax invoice is outlined under Rule 46 of the GST regulations, there are specific relaxations and additional requirements for certain industries. For example, special formats apply to banks, insurance companies, and financial institutions, as well as to goods transport agencies, passenger transport services, and input service distributors. For instance:
- Financial entities can issue a single monthly tax document that covers all supplies for that period.
- Passenger transportation service providers can use tickets as tax invoices.
GST invoice Rules
Below are a few important GST rules:
Minimum Amount for Raising a GST Invoice
Under the GST Act, an invoice is not mandatory for transactions less than ₹200 if the recipient is unregistered and does not request an invoice. However, businesses can issue a consolidated invoice at the end of the day that summarises all small transactions. This approach not only streamlines the invoicing process but also ensures accurate tracking of sales and administrative overhead.
Handling Purchases from Unregistered Dealers (URD) – Reverse Charge Invoice
When a registered business purchases goods or services from an unregistered supplier under the reverse charge mechanism in GST, the responsibility to issue an invoice falls on the recipient. This means that the recipient must create and maintain a valid invoice to document the purchase. For instance, if a manufacturer buys raw materials from a local supplier who is unregistered, the manufacturer must issue an invoice reflecting the GST applicable to that purchase.
Handling Advance Payments – Receipt Voucher
For any advance payments received before the delivery of goods or services, suppliers are required to issue a receipt voucher. This voucher acts as proof of the advance payment and is important for both the supplier’s and the recipient’s accounting records. It should include key details like the supplier’s and recipient’s names, addresses, GST identification numbers, the amount received, and a description of the goods or services.
Handling Exports Effectively – Export Invoice
Export invoices are specialised GST documents for international clients that contain unique details beyond GST standard invoices. These include a “Supply meant for export” statement, destination country, and shipping information like bill details, date, number, and port code. They also specify payment method, currency, and conversion rate. This documentation ensures proper customs and tax compliance.
Handling Special Deliveries – Delivery Challan
A Delivery Challan serves as a document for specific types of deliveries and transactions. It must be issued in various scenarios, including:
- Job Work: When sending goods for job work, such as a manufacturer sending components to a workshop for assembly, a Delivery Challan is required.
- Unknown Quantities: For the supply of liquid gas or other goods where the quantity is not ascertainable at the time of dispatch, a Delivery Challan can be used.
- Goods Sent on Approval: When goods are sent for approval or on a return basis, a Delivery Challan should accompany the goods.
- Exhibitions: Goods removed from the country for exhibitions or promotional events should be documented with a Delivery Challan. It clarifies that the items are for display and not for sale at that time.
Handling Revisions in Invoice Values – Debit Note / Credit Note
Adjustments to the values of invoices after they have been issued are essential to maintain accurate records and compliance with GST regulations. Businesses must issue either a debit note or a credit note, depending on the nature of the adjustment.
Debit Notes are issued when an additional amount needs to be paid. This situation arises when the original invoice was issued at a lower taxable value. For example, if a service provider realises they are undercharged for their services after issuing the invoice, they should issue a debit note to the customer to request the additional payment.
Credit Notes are issued when the amount payable decreases. This occurs when the original invoice was raised at a higher taxable value or tax amount than necessary. For instance, if a retailer returns unsold goods to a supplier, a credit note must be issued to adjust the original sale price.
How to Create a GST Invoice?
Such an invoice contains all the details of the supply of goods or services and applicable GST taxes and discounts. Creation of these invoices can be done manually or through computer software.
Numerous accounting software programs are available which have an in-built invoice-generation facility. Once you enter the sales/ outward supply and all relevant details, an invoice is automatically generated, printed, and issued to the buyer.
Following are the basic steps to understand how to make a GST bill. No matter what kind of software anyone uses, these steps are more or less the same.
STEP 1: Select the option ‘Invoice’ (built-in every accounting/GST software)
Choose the relevant branch (out of multiple branches) that will issue the invoice. If there is no branch, this option will not appear.
STEP 2: Feed-in Date of Invoice:
Type in the Invoice Date. One can also set the date of payment if outward supply is made on a credit basis. If payment is received on the same date, then the invoice date and the payment date will be the same.
STEP 3: Choose the debtor/customer from the list:
The list of customers/debtors is to be fed in before you create an invoice. The drop-down tab will show all these debtors. Select the relevant customer. If you haven’t fed in customer data, you can easily use the option ‘Create Debtor/Customer.’
STEP 4: Choose the Place of Supply
Place of supply is an essential requirement to ascertain the GST tax type: ‘IGST or CGST & SGST.’ The place of supply will be self-selected according to the delivery/shipment address. If such address is not known, the place of supply will be deemed to be the State where such supplier is registered.
STEP 5: Feed-in the details of goods or services
From the drop-down tab, simply select the goods or services to be supplied. If such a list is not previously typed in, one can simply select ‘Create Item’ and type in the relevant details of goods/services.
The CGST tax rate will auto-populate (based on the universal HSN/SAC codes generally built-in software). Then, select the unit, quantity, and any discount/incentives. IGST or CGST & SGST for the selected goods/services will be automatically shown.
STEP 6: Click to Create GST Invoice:
If all the above details are given, simply click the ‘Create GST Invoice’ option. Such an invoice is downloadable (either in Excel or PDF format) and can be printed.
One can also create an invoice using this online facility: Razorpay Invoices.
Important Note: The above steps are for the creation of a ‘GST Tax Invoice’ meant for Regular Taxpayers. For Composition Taxpayers, ‘Bill of Supply’ is created for which the above steps are equally applicable. The only difference: GST Tax cannot be charged in a Bill of Supply. The Tax Invoice and Bill of Supply have been explained below.
You can also calculate GST using Razorpay’s Online GST calculator based on different tax slabs.
You can instantly validate a GSTIN using our free GST Number Search & Verification Tool, which helps you verify the authenticity of a GST number online.
How Many Essential Copies for the GST Invoice Should Be Issued?
1. Copies for Goods Supply
In the context of goods supply under the GST system, it is mandatory to issue three essential copies of the invoice:
- Original Copy: This is intended for the recipient of the goods. It serves as proof of the transaction and is necessary for the recipient to claim the Input Tax Credit (ITC).
- Duplicate Copy: This copy is for the transporter or the individual in charge of moving the goods. It is used to verify the details of the goods being transported and to ensure that the correct items are delivered.
- Triplicate Copy: The supplier retains this copy for their records. It is used for bookkeeping and tax compliance purposes, serving as evidence of the sale.
Each copy plays a crucial role in the logistics and documentation processes, ensuring transparency and accountability in the movement of goods and the claiming of ITC.
2. Copies for Services Supply
For the supply of services, the invoicing process is more streamlined, involving only two key copies:
- Original Document: This is provided to the service recipient. The recipient uses it to substantiate the receipt of the service for accounting and ITC claims.
- Duplicate Copy: The service provider keeps this copy for internal record-keeping. It helps maintain accurate financial records and fulfil tax obligations.
The nature of service transactions does not necessitate additional copies since there is no physical movement of goods that requires tracking or verification by multiple parties.
How to Personalize GST invoices?
Making your invoices stand out can significantly elevate your business image. One effective way to achieve this is by adding your company logo. You can use Razorpay to customise your invoices by adding detailed descriptions, discounts, GST cess, tax types (exclusive/inclusive), and ITC information. You can also select your default business for invoicing and choose print sizes and orientations that suit your needs.
Conclusion
In conclusion, the GST invoice is essential for transparency and compliance in the taxation system. Its standardized format streamlines tax collection and ensures accurate transaction reporting. Additionally, GST invoices serve as proof of purchase and allow businesses to claim input tax credits, mitigating the cascading effect of taxes. Overall, they simplify the tax structure, enhance business operations, and support economic growth.
Frequently Asked Questions (FAQs)
1. Can I Issue Invoices Without GST?
Businesses registered under GST in India must issue a GST invoice for sales. A delivery challan is used instead if no sale occurs, but goods move. Non-registered entities or transactions exempt from GST can issue invoices without GST details.
2. Is a Handwritten GST Invoice Valid?
Yes, the GST invoice can be handwritten as long as it is legible and contains all the required details.
3. Is It Necessary to Mention HSN or SAC Codes on a GST Invoice?
Yes, mentioning HSN or SAC codes on a GST invoice is mandatory in India. For businesses with turnover above ₹5 crore, 6-digit codes are required. For those below, 4-digit codes for goods and services suffice.
4. How Do I Check the Validity of a GST Invoice?
To check a GST invoice’s validity in India, verify the GSTIN on the invoice using the GST portal’s ‘Search Taxpayer’ option. Input the GSTIN; a valid entry will display the taxpayer’s details, while an invalid one will prompt an error message.
5. How Can I Track My GST Invoice for Input Tax Credit Purposes?
You can track GST invoices for ITC through Form GSTR-1/IFF and view them in Form GSTR-2B.
6. Can I Use Invoicing Software to Generate GST-Compliant Invoices?
Yes, you can use invoicing software to generate GST-compliant invoices in India.
7. How Often Should I Issue GST Invoices and File GST Returns?
GST invoices should be issued within 30 days of the service supply. Regular businesses with over ₹5 crore turnover can file two monthly and one annual return. Small taxpayers under the QRMP scheme file quarterly returns and pay taxes monthly.
8. Can I Make Corrections to an Already-Issued GST Invoice?
Corrections to an already-issued GST invoice can be made through a revised or supplementary invoice. For significant changes, issue a credit or debit note. Ensure all amendments comply with GST regulations and are reported in the monthly returns.
9. What Is the Process for Cancelling a GST Invoice?
To cancel a GST invoice in India, log into the GST portal, navigate to the ‘e-Invoice’ section, and select ‘Cancel e-Invoice’. Enter the invoice reference number (IRN), choose a cancellation reason, add remarks if necessary, and submit. The cancellation must comply with the GST regulations.
10. Are There Penalties for Non-Compliance With GST Invoicing Rules?
Yes, non-compliance with GST invoicing rules can result in penalties. For not issuing an invoice, the penalty is 100% of the tax due or ₹10,000, whichever is higher and a penalty of ₹25,000 for incorrect invoicing. Specific offences may attract different penalties.
11. What is the Time limit for issuing the GST invoice?
The time limit for issuing an invoice varies based on the type of supply. For taxable services, the invoice must be issued within 30 days from the date of supply, while for goods involving movement, the invoice should be issued before or at the time of removal of the goods.
